Institutional linkages and organizational mortality

Administrative Science Quarterly,  June, 1991  by Joel A.C. Baum,  Christine Oliver

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Site-sharing arrangements (SSAs). Another institutional relation that confers legitimacy on CCSOs is permission to operate within the physical facilities of a well-established community institution. CCSOs may operate on their own independent premises or in space leased from or provided by community-based, educational and social-service-oriented organizations, including community centers, public schools, and churches.

SSAs provide CCSOs with enhanced legitimacy as a result of the visible association with legitimated institutions (Wiewel and Hunter, 1985). Since CCSO technologies are ambiguous and difficult to scrutinize on a day-to-day basis, parents are typically forced to rely on more generalized indicators of the legitimacy of child care services. CCSOs connected to institutions that evoke values of compassionate or responsible care, such as churches, well-known social service agencies, community centers, and public schools, reinforce parents' perceptions that these particular CCSOs are legitimate and reliable providers of high-quality care. In addition to the legitimacy that SSAS confer, CCSOs may receive direct financial support from the host institution, avoid costs associated with site maintenance, and additionally, when operating space is provided by the host, secure a substantial reduction in overhead costs. CCSOs may also gain relatively exclusive access to demand for services from the potential client population of the host institution. However, the excess demand for child care services in the metropolitan area, described above, suggests that gaining access to the clientele associated with the host organization is likely not the primarily rationale for the establishment of site-sharing relations. We examined empirically the possibility that the effects of SSAs were exclusively resource-based. Using the MCSS archives, we were able to determine that, between 1979 and 1987, 38 percent of day cares and 29 percent of nurseries with SSAs were operated by their hosts. To determine whether the resource advantages of CCSOs operated by their host institutions provided s distinct survival advantage, we estimated a model that examined the relative mortality rates of CCSOs operated by their SSA hosts and CCSOs operated independently of their SSA hosts. The results for both day cares and nurseries indicate that the mortality rates of CCSOs with these two types of SSA linkages were not significantly different. This strongly suggests that the effects of SSAs are not exclusively resource-based. Table 1 gives the number of POSAs and SSAs established by day cares and nurseries (by profit orientation) in each observation year. POSAs and SSAs were defined to start in the year they were first reported in the MCSS archives or Community Information Center Directory. Over 95 percent of day cares that established POSAs did so in their first year. While on several occasions POSAs have been revoked, the CSD prefers to help day cares improve the quality of the care they provide rather than disrupt their clients. In the few cases in which the CSD actually terminated POSAs, the centers involved were on the verge of failing (and closed shortly after the POSA's termination) and were not good prospects for "rehabilitation".(4) Our data indicate that all SSAs were established at the time of founding and that no CCSOs broke an SSA by moving location. To test hypothesis 1, dummy variables were created for POSA and SSA linkages. The POSA linkage variable was set equal to 1 in each year a day care had a POSA and O otherwise. The SSA linkage variable was set equal to 1 for CCSOs with SSAs and O otherwise.